If you received unemployment benefits from the state last year, don’t file your taxes just yet.
The state could soon forgive taxes on those benefits.
Over a hundred thousand Delawareans received unemployment benefits this past year, and tax season is coming up.
What many people might not know is they’re expected to pay state and federal taxes on unemployment benefits.
“In the State of Delaware, you cannot withhold state taxes from your unemployment benefits. You can withhold federal taxes from your benefits,” State Rep. Ed Osienski (D-Brookside).
That could leave some with unanticipated state taxes to pay.
Osienski explains why this might create a big problem.
“Close to 100,000 Delawareans are gonna be surprised by a tax bill this tax season and there’s concerns that many will go into collections or be delinquent cause they’re still struggling with this.”
Osienski and State Sen. Jack Walsh (D-Stanton) are sponsoring legislation to forgive any state taxes on unemployment benefits from last year.
People still have to pay federal taxes on their unemployment checks if they didn’t have that money deferred, since Congress did not forgive those in their last Coronavirus relief package in December.
The measure would cost the state around $18 Million in taxes, according to Osienski. If the bill is passed, he says the money would be made up for in the Governor's reccomended budget which will be unveiled later this month.
The bill cleared the House Administration Committee unanimously Wednesday. It now heads to the House floor for a vote.
Gov. John Carney supports the measure.